Finance Minister seeks approval for GH¢3billion supplementary budget

Minister of Finance Seth Terkper has beseeched Parliament to approve a Supplementary Estimate of GH¢3,196,855,671 for the 2014 fiscal year to enable government effectively run the affairs of the country.

The need for a supplementary budget, Mr. Terkper explained was ‘necessitated by recent, and in some cases, longstanding global and domestic developments.’

This was contained in his mid-year review and revised budget and macroeconomic targets for 2014 presented to Parliament today in conformity with Article 179(8) of the Constitution and Standing Order 143 of this House.

He took time to update Members of Parliament on up-to-date performance of the economy in 2013 and the first five months of 2014.

He also outlined measures for addressing Ghana’s international reserves to restore the value of the Ghana Cedi.

Mr Terkper acknowledged that the economy has since 2013 experienced a number of pressures, which continue to pose challenges to the attainment of the 2014 economic targets.

Notable among these challenges, he mentioned, ‘the continuing shortfalls in tax and non-tax revenues, notably from grants and concessional financing – in the case of tax revenues, also partly due to the lower national output; the consequential depreciation of the Cedi, which is having significant adverse effects on economic activity, public expenditure and other macroeconomic variables; and declining gold and cocoa prices in 2013 which continue to have a lingering effect on the economy.’

The economy was also hit by a disrupted power production and output which resulted in the country’s reliance on higher imports of crude oil for thermal power generation.

But the Finance Minister enumerated ‘bold efforts’ by government to address challenges facing the economy.

He said government is expecting increases in oil and gas exploration and production, particularly from the Jubilee, Sankofa-Gye Nyame and Tweneboa-Enyenra-Ntomme (TEN).

He also announced the building of a second Floating Production Storage and Offloading (FPSO) vessel and ongoing negotiations for gas pricing to buttress his claims.

Government is also hoping that the construction of gas pipelines and processing plant would be completed to stabilize and improve the supply of energy and domestic output.

‘It is estimated that strategic infrastructure investments in the oil and gas sector could generate an additional US$2.5 billion in revenues, and increase our GDP growth,’ he stated.

‘We wish to reiterate that the short-to-medium term prospects for Ghana remain positive,’ he stated hopefully.

Even though the GDP data for 2013 released by the Ghana Statistical Service (GSS) showed an overall GDP growth of 7.1 percent against the target of 8.0 percent, Mr. Terkper said the figure   shows a robust and strong performance, especially when compared to the Sub-Saharan average of 4.9 percent and global average of 3 percent for 2013.

He also gave account of Ghana’s public debt, which in terms of GDP stood at 55.77 percent as at end-December 2013, representing an increase from the December 2012 ratio of 48.03 percent.

‘Ghana’s total public debt stock, which stood at GH¢35,999.64 million (US$19,150.78 million) as at end-December 2012, increased to GH¢52,125.91million (US$24,021.16 million) at the end of December 2013. Of the total public debt stock, external debt was GH¢21,545.72 million (US$11,461.71 million) while domestic debt amounted to GH¢27,132.7 million (US$12,559.45 million), representing 47.72% and 52.28% of total debt, respectively.’

He also said at the end of June 2014, the country’s Gross International Reserves stood at US$4,471 million. This, he said, is sufficient to provide 2.5 months of imports cover compared to the stock position of US$5,632.15 million at the end of December 2013 which could cover 3.1 months of imports.

He told the House developments in both the global and domestic economic environment have necessitated a revision of the macroeconomic framework and assumptions underlying the 2014 Budget that was presented in November, 2013.

He mentioned for instance the implementation of the 10 percent Cost of Living Allowance (COLA) to Government employees, effective May 2014.

‘The current energy challenge, rising inflation and interest rates, as well as exchange rate depreciation pose a strong downside risk to the achievement of the growth target for the year,’ he maintained.

He said the 2014 macroeconomic targets have been revised as follows:

overall real GDP (including oil) growth revised from 8.0 percent to 7.1 percent;

non-oil real GDP growth revised from 7.4 percent to  6.6 percent;

an end year inflation target revised from 9.5 ±2 percent to 13.0±2 percent;

overall budget deficit target revised from 8.5 percent of GDP to 8.8 percent; and

Gross International Reserves of not less than 3 months of import cover of goods and services.

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